Carla Zeineh and her husband recently discovered that it was cheaper for them to buy a home than to rent one. With a 5% mortgage rate, and 20% down payment, their monthly cost on a $350,000 home would be less than the $1,800 per month they now pay on their rental condo.
More and more people are finding that it is now cheaper to own their own homes than it is to rent and are following in Carla's footsteps of embarking on their quest to Home ownership.
Using data that measures average home prices and rent payments for 54 metro areas between 1984 and 2004, Moody's Economy.com estimated that eight markets are "undervalued." In those eight markets, home prices relative to rents are below or within 5% of their historical levels.
The cost of owning a home relative to renting has fallen sharply. Lower prices and interest rates, coupled with various other incentives like the $8,000 tax credit have induced many Renters to finally jump the fence into home ownership.
What are you seeing in your markets? We are super busy in Myrtle Beach!
13 comments • Myrtle Beach Real Estate by Mirela Monte • February 24 2009 10:30PM
I look forward to hearing from you on this!
I never thought this day would come back in San Diego, CA. but we are there for some areas.
Mirela,
This is a common pattern. Most of us have clients that have finally had the facts sink in. We preach, blog, email, and say this till we are blue in the face. It is nice when it actually sinks in though.
Larry: We've been telling them, but now they are actually listening...
George: I know, it's hard to believe...
Bruce: It's a timid "stampede"...
Hi Mirela... The math is like that here too, but many people are still choosing to rent because they are uncertain about the economy and their employment. The one thing that I find most buyers seeking is some stability in their lives and without reasonably secure employment and signs that the economy is not going to deteriorate further, many folks are choosing to rent for a while longer.
Hi Mirela, In our area, we have very few rentals, so I don't have a good point of reference. Your post however, is terrific news! one more good reason to be a buyer in this market!
great example who why buying is the right move for some people in today's market
This is a point that needs to be emphasized more now that housing has become more affordable with lower home prices and low interest rates. This market represents the best buying opportunity since the early 1990's. A good rent vs own software program will help to show the benefits of home ownership.
Mirela, I put together a rent vs own comparison for one of my agent's listings. not only can the PITI be similar to what they are currently paying in rent (even with as little as 3.5% down) but the after tax advantage often makes owning significantly CHEAPER than renting.
Really good reason to buy!
Used to be cheaper to rent, now it is more equal. Buit a renter has to consider cost of repairs, maintenance, property taxes, HOA fees, etc. Those are paid by the Owner in a rental.
I've been working with colleagues in Arizona referring Canadians down. Their market is still pretty bad. (Not for the buyers of course). The have tons of inventory.